Procurement (Hansard, 27 October 2003)

§ Mr. Wray
To ask the Secretary of State for Defence whether his Department gives preference to British defence companies(a) when selecting producers for equipment and (b) for project procurement; and if he will make a statement. [133043]

§ Mr. Ingram
Open and fair competition remains the bedrock of the Ministry of Defence's procurement policy. However, we are also prepared to use other approaches for our acquisition requirements where they offer better long term value for money. The MOD's non-warlike acquisition requirements are subject to the EC Public Procurement Regulations that require such opportunities be advertised in the Official Journal of the European Union.
8WS
The Government's Defence Industrial Policy Paper (published in October 2002) recognises that, although acquisition decisions will be driven principally by key factors such as cost and operational effectiveness, they also need to take into account wider factors, such as industrial capabilities, which are desirable to retain in the United Kingdom. The Government are committed to a strong and healthy UK defence industry owing to the economic value that the industry brings to the UK by creating employment, technology and intellectual property in this country. Globalisation of the defence business means that the UK defence industry embraces suppliers that bring benefit and create value within the UK, regardless of the nationality of their shareholders.

§ Angus Robertson
To ask the Secretary of State for Defence what the terms of the contract for the procurement of Meteor missiles are, with particular reference to the total agreed to purchase cost; and if he will make a statement. [133645]

§ Mr. Ingram
The Meteor contract with MBDA UK Ltd covers development, the delivery of development hardware to support aircraft integration programmes (on each of Typhoon Eurofighter, Rafale and Gripen), production of the missiles and Contractor Logistics Support. The total current contract cost is some £1.2 billion, to which the UK has committed some £700 million.
At this time, only the UK has committed to the delivery of production missiles and to the associated Contractor Logistic Support (for a period of 10 years). Production options in the contract include a number of pricing break points, with the overall unit production prices reducing as those break point quantities are exceeded. Under the terms of the Meteor Memorandum of Understanding, all Partner Nations will pay the same unit production price for Meteor missiles ordered during the option period. If current estimates of Partner Nations' production quantities are fulfilled, the unit production cost for the UK's missiles will reduce from that currently budgeted.